The Myth and Truth Behind Nonprofits’ Overhead Expenses

According to the National Council of Nonprofits, overhead expenses of a typical nonprofit are often misunderstood[2]. The idea that effective nonprofits don’t need to spend a lot to perform their duties continues to persist, so overhead expenses are usually seen as markers of ineffectiveness, especially when they’re higher than expected. Not many people seem to realize that when nonprofits work toward achieving their goals, they also incur substantial administrative costs covering management, general, and fundraising in the process. This misconception of nonprofits’ true expenses is often reflected in the disproportionate size of grants to the outcomes grantmakers expect. How often have nonprofits encountered a small grant with big demands attached to it? Too often, it seems.